<PAGE>

                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549


                                   FORM 10-Q
(Mark One)

[X]    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
       EXCHANGE ACT OF 1934


                 For the quarterly period ended March 25, 2002

                                      OR

[_]    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
       EXCHANGE ACT OF 1934

          For the transition period from_______to

                        Commission file number 0-19649

                      Checkers Drive-In Restaurants, Inc.
            (Exact name of Registrant as specified in its charter)


      Delaware                                                   58-1654960
      (State or other jurisdiction of                      (I.R.S. employer
      incorporation or organization)                    identification no.)

      4300 West Cypress Street
      Suite 600
      Tampa, FL                                                       33607
      (Address of principal executive offices)                   (Zip code)

              Registrant's telephone number, including area code: (813) 283-7000

    Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [_]

    The Registrant had 11,176,310 shares of Common Stock, par value $.001 per
share, outstanding as of March 25, 2002.
<PAGE>

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
PART I            FINANCIAL INFORMATION                                                                                   PAGE
<S>               <C>                                                                                                     <C>
Item 1            Financial Statements

                     Consolidated Balance Sheets
                         March 25, 2002 and December 31, 2001............................................................  3

                     Consolidated Statements of Income and Comprehensive Income
                         Quarters ended March 25, 2002 and March 26, 2001................................................  4

                     Consolidated Statements of Cash Flows
                         Quarters ended March 25, 2002 and March 26, 2001  ..............................................  5


                     Notes to Consolidated Financial Statements..........................................................  6

Item 2            Management's Discussion and Analysis of Financial Condition
                  and Results of Operations.............................................................................. 10

Item 3            Quantitative and Qualitative Disclosures About Market Risk............................................. 14

PART II           OTHER INFORMATION

Item 1            Legal Proceedings...................................................................................... 14

Item 2            Changes in Securities and Use of Proceeds.............................................................. 16

Item 3            Defaults Upon Senior Securities........................................................................ 16

Item 4            Submission of Matters to a Vote of Security Holders ................................................... 16

Item 5            Other Information...................................................................................... 16

Item 6            Exhibits and Reports on Form 8-K....................................................................... 16
</TABLE>

                                       2
<PAGE>

ITEM 1.       FINANCIAL STATEMENTS

                      CHECKERS DRIVE-IN RESTAURANTS, INC.
                               AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEETS
                            (Dollars in thousands)
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                            March 25,          December 31,
                                                                                              2002                 2001
                                                                                        -----------------    ---------------
<S>                                                                                   <C>                   <C>
Current Assets:
Cash and cash equivalents                                                               $          11,618    $         7,159
Restricted cash                                                                                     3,582              3,482
Accounts, notes and leases receivable, net                                                          2,482              3,420
Inventory                                                                                           1,036              1,122
Prepaid expenses and other current assets                                                           1,249              2,337
Property and equipment held for sale                                                                3,118              3,230
                                                                                        -----------------    ---------------
    Total current assets                                                                           23,085             20,750

Property and equipment, net                                                                        48,630             49,136
Notes receivable, net - less current portion                                                        2,912              3,527
Lease receivable, net - less current portion                                                        6,206              6,669
Intangible assets, net                                                                             45,104             45,189
Other assets, net                                                                                   1,826              1,989
                                                                                        -----------------    ---------------
                                                                                        $         127,763    $       127,260
                                                                                        =================    ===============
Current Liabilities:
Current maturities of long-term debt and obligations under capital leases               $           4,770    $         4,743
Accounts payable                                                                                    5,541              6,645
Reserves for restaurant relocations and abandoned sites                                             1,820              1,879
Accrued wages and benefits                                                                          2,302              2,271
Accrued liabilities                                                                                 7,146              7,686
                                                                                        -----------------    ---------------
    Total current liabilities                                                                      21,579             23,224

Long-term debt, less current maturities                                                            24,421             25,192
Obligations under capital leases, less current maturities                                           6,716              6,981
Long-term reserves for restaurant relocations and abandoned sites                                   2,547              2,549
Minority interests in joint ventures                                                                  339                312
Deferred revenue                                                                                    5,110              5,440
Other long-term liabilities                                                                         4,022              3,938
                                                                                        -----------------    ---------------
    Total liabilities                                                                              64,734             67,636

Stockholders' Equity:
Preferred stock, $.001 par value, authorized 2,000,000 shares, none
    issued at March 25, 2002 and December 31, 2001                                                      -                  -
Common stock, $.001 par value, authorized 175,000,000 shares, issued
    11,176,310 at March 25, 2002 and 10,914,727 at December 31, 2001                                   11                 11
Additional paid-in capital                                                                        143,809            143,004
Accumulated deficit                                                                               (80,259)           (82,891)
                                                                                        -----------------    ---------------
                                                                                                   63,561             60,124
Less:  Treasury stock, 48,242 at March 25, 2002
          and December 31, 2001, at cost                                                             (465)              (400)
       Note receivable - officer                                                                      (67)              (100)
                                                                                        -----------------    ---------------
    Total stockholders' equity                                                                     63,029             59,624
                                                                                        -----------------    ---------------
                                                                                        $         127,763    $       127,260
                                                                                        =================    ===============
</TABLE>

See accompanying notes to consolidated financial statements.

                                       3
<PAGE>

                       CHECKERS DRIVE-IN RESTAURANTS, INC.
                                AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF INCOME
                            AND COMPREHENSIVE INCOME
                 (Dollars in thousands except per share amounts)
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                            Quarter Ended
                                                                       -------------------------
                                                                        March 25,   March 26,
                                                                          2002         2001
                                                                       -------------------------
<S>                                                                    <C>          <C>
REVENUES:
Restaurant sales                                                          $ 37,093     $ 31,683
Franchise royalty revenue                                                    3,322        3,438
Franchise fees and other income                                                  4          174
                                                                       -------------------------
   Total revenues                                                         $ 40,419     $ 35,295
                                                                       -------------------------

COSTS AND EXPENSES:
Restaurant food and paper costs                                             11,247       10,219
Restaurant labor costs                                                      11,787       10,423
Restaurant occupancy expenses                                                2,608        2,510
Restaurant depreciation and amortization                                     1,292          970
Other restaurant operating expenses                                          4,666        4,024
General and administrative expenses                                          3,012        2,831
Advertising                                                                  2,126        1,847
Bad debt expense                                                               100          179
Non-cash compensation                                                           23           23
Other depreciation and amortization                                            152          793
Restaurant closure expense                                                     375           18
Gain on sale of assets                                                         (77)        (364)
                                                                       -------------------------
  Total costs & expenses                                                    37,311       33,473
                                                                       -------------------------
  Operating income                                                           3,108        1,822
OTHER INCOME (EXPENSE):
Interest income                                                                397          449
Interest expense                                                              (814)      (1,377)
                                                                       -------------------------
  Income before minority interests and income tax expense                    2,691          894
Minority interests in operations of joint ventures                             (27)         (14)
                                                                       -------------------------
  Income before income tax expense                                           2,664          880
Income tax expense                                                               -           37
                                                                       -------------------------
  Net income                                                              $  2,664     $    843
                                                                       =========================
  Comprehensive income                                                    $  2,664     $    843
                                                                       =========================

Basic net earnings per share                                              $   0.24     $   0.09
                                                                       =========================

Diluted net earnings per share                                            $   0.21     $   0.07
                                                                       =========================

Weighted average number of common shares outstanding:
    Basic                                                                   10,960        9,744
    Diluted                                                                 12,854       11,381
</TABLE>

See accompanying notes to consolidated financial statements.

                                       4
<PAGE>

                       CHECKERS DRIVE-IN RESTAURANTS, INC.
                                AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (Dollars in thousands)
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                                      Quarter Ended
                                                                                             ---------------------------------
                                                                                               March 25,         March 26,
                                                                                                  2002             2001
                                                                                             ---------------  ----------------
<S>                                                                                          <C>              <C>
Cash flows from operating activities:
  Net income                                                                                      $   2,664          $    843
  Adjustments to reconcile net earnings to net cash
      provided by operating activies:
    Depreciation and amortization                                                                     1,444             1,763
    Amortization of deferred loan costs                                                                  52               131
    Provisions for bad debt                                                                             100               179
    Non-cash compensation                                                                                23                23
    Gain on sale of assets                                                                              (77)             (364)
    Minority interest in operations of joint ventures                                                    27                14
  Change in assets and liabilities:
    Decrease in receivables                                                                           1,241               988
    Decrease (increase) in inventory                                                                    152               (23)
    Decrease in prepaid expenses and other current assets                                             1,088             1,302
    Decrease in other assets                                                                            111                 -
    Decrease in accounts payable                                                                     (1,104)           (2,042)
    Decrease in accrued liabilities                                                                    (595)           (1,417)
                                                                                             ---------------  ----------------
        Net cash provided by operating activities                                                     5,126             1,397
                                                                                             ---------------  ----------------
Cash flows from investing activities:
  Capital expenditures                                                                               (1,119)             (922)
  Acquisition of restaurants, net of cash acquired                                                      (66)             (230)
  Proceeds from sale of property & equipment                                                          1,021               139
                                                                                             ---------------  ----------------
        Net cash used in investing activities                                                          (164)           (1,013)
                                                                                             ---------------  ----------------
Cash flows from financing activities:
  Principal payments on long-term debt and capital lease obligations                                 (1,009)             (732)
  (Increase) decrease in restricted cash                                                               (100)              320
  Proceeds from exercise of stock options and warrants                                                  782               245
  Proceeds from issuance of long-term debt                                                                -               580
  Repayment of note receivable - officer                                                                 33                 -
  Purchase of treasury stock                                                                           (209)                -
  Deferred loan costs incurred                                                                            -               (59)
  Distributions to minority interests                                                                     -               (30)
                                                                                             ---------------  ----------------
         Net cash (used in) provided by financing activities                                           (503)              324
                                                                                             ---------------  ----------------
         Net increase in cash                                                                         4,459               708
Cash at beginning of period                                                                           7,159               923
                                                                                             ---------------  ----------------
Cash at end of period                                                                             $  11,618          $  1,631
                                                                                             ===============  ================
Supplemental disclosures of cash flow information
    Interest paid                                                                                 $     745          $  1,090
                                                                                             ===============  ================
    Issuance of capital lease obligation for equipment                                            $       -          $  1,610
                                                                                             ===============  ================
    Note receivable accepted for market sale                                                      $       -          $  2,100
                                                                                             ===============  ================
    Issuance of treasury stock                                                                    $     110          $      -
                                                                                             ===============  ================
</TABLE>

See accompanying notes to consolidated financial statements.

                                       5
<PAGE>

                      CHECKERS DRIVE-IN RESTAURANTS, INC.
                               AND SUBSIDIARIES
                             NOTES TO CONSOLIDATED
                             FINANCIAL STATEMENTS
                                  (UNAUDITED)

Note 1:   Summary of Significant Accounting Policies

(a)  Basis of Presentation - The accompanying unaudited consolidated financial
statements include the accounts of Checkers Drive-In Restaurants, Inc., its
wholly-owned subsidiaries, and its joint ventures, collectively referred to as
"the Company". The consolidated financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and the instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all the information and notes required by
generally accepted accounting principles for complete financial statements. In
the opinion of management, all adjustments necessary to present fairly the
information set forth therein have been included.

     The accounts of our joint ventures have been included with those of the
Company in these consolidated financial statements. Intercompany balances and
transactions have been eliminated in consolidation and minority interests have
been established for the outside partners' interests. The Company reports on a
fiscal year which will end on the Monday closest to December 31st. Each quarter
consists of three 4-week periods, with the exception of the fourth quarter which
consists of four 4-week periods.

     The operating results for the quarter ended March 25, 2002, are not
necessarily an indication of the results that may be expected for the fiscal
year ending December 30, 2002. Except as disclosed herein, there has been no
material change in the information disclosed in the notes to the consolidated
financial statements included in the Company's Annual Report on Form 10-K for
the year ended December 31, 2001. Therefore, it is suggested that the
accompanying consolidated financial statements be read in conjunction with the
Company's December 31, 2001 consolidated financial statements.

(b)  Purpose and Organization - Our principal business is the operation and
franchising of Checkers(R) and Rally's Hamburgers(R) (Rally's) restaurants. At
March 25, 2002, there were 386 Rally's restaurants operating in 17 different
states and there were 409 Checkers restaurants operating in 21 different states,
the District of Columbia, Puerto Rico and the West Bank in the Middle East. Of
the 795 total restaurants, 255 are owned by us and 540 are owned by franchisees.
Three of the Company-owned restaurants are owned by joint venture partnerships
in which we have a 50%, 51% and 75% ownership interest.

     Our restaurants offer high quality food, serving primarily the drive-thru
and take-out segments of the quick-service restaurant industry. Checkers
commenced operations in April 1986 and began offering franchises in January
1987. Rally's opened its first restaurant in January 1985 and began offering
franchises in November 1986.

(c)  Use of Estimates - The preparation of the financial statements in
conformity with accounting principles generally accepted in the United States of
America require management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the reported amounts
of revenues and expenses during the reported period. Actual results could differ
from those estimates.

(d)  Reclassifications - Certain amounts in the 2001 financial statements have
been reclassified to conform to the 2002 presentation.

Note 2:   Liquidity and Capital Resources

     The restaurant industry, in general, operates with a working capital
deficit because most of our investments are in long-term restaurant operating
assets. We do not normally require large amounts of working capital to maintain
operations since sales are for cash, purchases are on open accounts and meat and
produce inventories are limited to a three-to-five day supply to assure
freshness. We do not have significant levels of accounts receivable or
inventory, and receive credit from our trade suppliers. Funds available from
cash sales not needed immediately to pay our trade suppliers are used for
non-current capital expenditures.

     We have positive working capital of $1.5 million at March 25, 2002 as
compared to a $2.5 million deficit at December 31, 2001. The change to liquidity
is primarily due to operating profits for the quarter of $2.7 million and
additional capital contributions of $0.8 million from the exercise of options
and warrants into 261,583 shares of common stock.

     The Company is subject to certain restrictive financial and non-financial
covenants under certain of its debt agreements, including EBITDA and a Fixed
Charge Coverage ratio. We were in compliance with all of the covenants for the
quarter ended March 25, 2002.

                                       6
<PAGE>

     Although there can be no assurance, we believe that our existing cash at
March 25, 2002, the cash provided from operations, and the available $2.8
million line of credit will be sufficient to meet our working capital and
capital expenditure requirements for the next 12 months.

Note 3:        Lease Receivables

     As a result of the sale of Company-owned restaurants in 1999 and 2000, we
have recorded capital lease receivables for those restaurants sold which are
subject to capital lease and mortgage obligations. The amount of capital lease
receivables as of March 25, 2002 was approximately $6.7 million. As of March 31,
2002, we have deferred gains of $4.8 million from these sales since we continue
to be responsible for the payment of these obligations to the original lessors
and mortgagors. The gains are being recognized over the life of the related
capital leases. The deferred gains are included in the consolidated balance
sheet under the captions accrued liabilities-current and deferred revenue for
$0.5 million and $4.3 million, respectively.

     We have subleased the property associated with the sale of Company-owned
restaurants under operating leases. The revenue from these subleases is offset
against rent expense, as we continue to be responsible for the rent payments to
the original lessors.

Note 4:        Intangible Assets

     We assess the impairment of long-lived, identifiable intangible assets and
enterprise level goodwill whenever events or changes in circumstances indicate
that the carrying value may not be recoverable. Factors we consider important
which could trigger an impairment review include the following:

     .    significant underperformance relative to expected historical or
          projected future operating results;
     .    significant negative industry or economic trends;
     .    significant decline in our stock price for a sustained period; and
     .    our market capitalization relative to net book value.

     We account for long-lived assets under Statement of Financial Accounting
Standards No. 144, "Accounting for the Impairment or Disposal of Long-Lived
Assets" (SFAS 144), which we adopted on January 1, 2002. SFAS 144 requires the
write-down of certain intangibles and tangible property associated with
under-performing sites. Impairments or recoveries are recorded to adjust the
asset values to the amount recoverable under the discounted cash flow analysis,
in accordance with SFAS No. 144. We did not recognize any impairments during the
quarter ended March 25, 2002.

     On January 1, 2002, we adopted Statement of Financial Accounting Standards
No. 142, "Goodwill and Other Intangible Assets" (SFAS 142). As a result, we
ceased to amortize approximately $24 million of goodwill and $17.5 million for
the intangible value of our tradename. We recorded approximately $549,000 of
amortization on these amounts during the quarter ended March 26, 2001 and would
have recorded approximately $549,000 of amortization during the quarter ended
March 25, 2002. In lieu of amortization, we performed an initial impairment
review of our goodwill and tradename as of January 1, 2002. Based upon the
review, no impairment charge was required and we do not believe circumstances
have changed since the review date which would make it necessary to reassess
their values as of the balance sheet date.

Intangible assets consist of the following:

                             March 25,    Dec. 31,
                                2002        2001
                             ---------    --------

Goodwill                      $ 24,252    $ 24,252
Tradename                       17,548      17,548
Amortizable intangible assets    3,304       3,389
                              --------    --------
   Intangible assets, net     $ 45,104    $ 45,189
                              ========    ========

<TABLE>
<CAPTION>
                                                March 25, 2002                   December 31, 2001
                                       --------------------------------   ------------------------------
                                        Gross        Accum                  Gross      Accum                Estimated
                                        Amount       Amort       Net       Amount      Amort      Net         Lives
                                       --------    ---------   --------   --------   --------   --------  -------------
<S>                                    <C>         <C>         <C>        <C>        <C>         <C>      <C>
Reacquired franchise rights            $  1,359    $    (396)  $    963   $  1,359   $   (358)   $ 1,001   1-11 years
Other intangibles                         4,191       (1,850)     2,341      4,191     (1,803)     2,388  10-25 years
                                       --------    ---------   --------   --------   --------   --------
   Amortizable intangible assets       $  5,550    $  (2,246)  $  3,304   $  5,550   $ (2,161)   $ 3,389
                                       ========    =========   ========   ========   ========   ========

</TABLE>

                                       7
<PAGE>

Note 5:      Revolving Line of Credit

     The Company has a revolving loan facility with Textron Financial
Corporation that permits the Company to borrow up to 50% of collateral pledged.
The credit facility is available through June 15, 2002 with an interest rate
equal to LIBOR plus 4.5% (6.37% at March 25, 2002). Total collateral pledged as
of March 25, 2002 was approximately $5.7 million, consisting primarily of
property and equipment. There were no borrowings under the loan facility as of
March 25, 2002.

Note 6:      Long-term debt and Obligations under Capital Leases

Long-term debt and obligations under capital leases consist of the following:

<TABLE>
<CAPTION>
                                                                                                       March 25,       December 31,
                                                                                                         2002              2001
                                                                                                   ---------------   ---------------
<S>                                                                                                 <C>                <C>
Note payable (Loan A) to Textron Financial Corporation payable in 120 monthly
   installments, maturing July 1, 2010, including interest at LIBOR plus 3.7%
   (5.57% at March 25, 2002) secured by property and equipment.                                     $       10,649   $       10,817

Mortgages payable to FFCA Acquisition Corporation secured by thirty- three
   Company-owned restaurants, payable in 240 aggregate monthly
   installments of $133,295, maturing January 1, 2019, including interest at 9.5%.                          13,414           13,494

Note payable to Heller Financial secured by the equipment at Company-owned
   restaurants, payable in 30 monthly installments of $153,712, maturing
   December 1, 2003, including interest at 14%. The balance was completely repaid                            2,848            3,085
   on April 15, 2002.

Obligations under capital leases, maturing at various dates through December
   1, 2019, secured by property and equipment, bearing interest ranging from
   7.3% to 10%. The leases are payable in monthly principal and interest installments
   averaging $86,000.                                                                                        3,265            3,445

Obligations under capital leases, maturing at various dates through January
   1, 2016, secured by property and equipment, bearing interest ranging from
   10.3% to 16.3%. The leases are payable in monthly principal and interest installments
   averaging $182,000.                                                                                       4,775            5,013

Notes payable to former Rally's franchise owners for acquisition of markets,
   secured by the related assets acquired, with maturities through May 1, 2004, bearing
    interest at 7.5% and 7.75%. The notes are payable in monthly principal and
   interest installments of $8,416 and $15,420.                                                                473              534

Other notes payable, maturing at various dates through September 17, 2004,
   secured by property and equipment, bearing interest ranging from 0%
   to 7.70%. The notes are payable in monthly principal and interest installments
   ranging from $452 to $18,095.                                                                               483              528
                                                                                                   ---------------   --------------

Total long-term debt and obligations under capital leases                                                   35,907           36,916

Less current installments                                                                                   (4,770)          (4,743)
                                                                                                   ---------------   --------------
Long-term debt, less current maturities                                                            $        31,137   $       32,173
                                                                                                   ===============   ==============
</TABLE>


Although we continue to be obligated, approximately $6.7 million of the mortgage
and capital lease obligations noted above pass directly through to franchisees
as a result of Company-owned restaurant sales (See Note 3).


Note 7:      Treasury Stock

     On February 19, 2002, the Company issued 17,350 shares of common stock
previously held as treasury stock to Mr. Dorsch, as compensation, in accordance
with his employment agreement. In addition, the Company repurchased an
additional 17,350 shares of common stock to be held as treasury stock on March
20, 2002 for $208,755.

                                       8
<PAGE>

Note 8:      Acquisitions

     On January 26, 2002, we reacquired the Checkers' restaurants in
Philadelphia which were previously sold to a franchisee in February 2001. As a
result of the acquisition, deferred revenues of $2.1 million were removed from
the balance sheet along with the associated note receivable as of December 31,
2001, which was to be collected in installments through 2005. As a result of the
gain deferral in 2001 at the time of the sale, no gain or loss was recognized
from this transaction.

     On March 24, 2002, we reacquired eight Rally's restaurants located in
Detroit from RJR Receiver, LLC. We paid a total of approximately $131,000 for
the restaurants.

Note 9:      Accounting Charges and Loss Provisions

     At the end of fiscal 2001, we had reserves of $4.4 million relating to
restaurant relocations and abandoned sites. These reserves represent
management's estimate of future lease obligations and are reviewed and adjusted
periodically, as more information becomes available related to our ability to
sublease or assign the lease and other negotiations with the landlord. During
the quarter ended March 25, 2002, the Company made lease and other payments of
$434,000, relating to restaurant relocations and abandoned sites. Additional
reserves of $375,000 were recognized during the quarter ended March 25, 2002.


Note 10:     Income Taxes

     We account for income taxes under Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes" (SFAS 109). Under the asset or
liability method of SFAS 109, deferred tax assets and liabilities are recognized
for the future tax consequences attributable to differences between the
financial statement carrying amounts of existing assets and liabilities and
their respective tax bases. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the years in
which those temporary differences are expected to be recovered or settled. Under
SFAS 109, the effect on deferred tax assets and liabilities of a change in tax
rates is recognized in income in the period that includes the enactment date.

     As a result of the Merger in 1999, both companies experienced an ownership
change as defined by Internal Revenue Code Section 382. Pursuant to IRC Section
382, the surviving entity or post-merger Checkers is significantly limited in
utilizing the net operating loss carryforwards that were generated before the
Merger to offset taxable income arising after the ownership change. As of August
9, 1999 Rally's and Checkers had net operating loss carryforwards of
approximately $49.8 million and $60.9 million, respectively for a combined total
of $110.7 million. We believe that the limitations imposed by IRC Section 382
could restrict the prospective utilization of the total pre-merger net operating
loss carryforward to approximately $31.3 million over the carryforwards life of
the net operating losses. The remaining pre-merger net operating loss
carryforward of $79.4 million could expire before becoming available under these
limitations. The $31.3 million net operating loss carryforwards are subject to
limitation in any given year and will expire in 2018. The Company has
approximately $5 million of post-merger net operating loss carryforward
available through 2020, and approximately $1.8 million of alternative minimum
tax credit carryforwards available indefinitely.

     A valuation allowance has been provided for 100 percent of the deferred tax
assets since management cannot determine that it is more likely than not that
the deferred tax assets will be realized. Management will continue to review the
likelihood of the future realization of the deferred tax assets, and the benefit
related to the deductible temporary differences will be recognized as a
reduction of income tax expense when realization is more likely than not to
occur.

Note 11:     Subsequent Events

a) Acquired Restaurant - On March 26, 2002, we bought the minority interest in
our 50% owned joint venture located in Marietta, Georgia for $40,000 cash and
assumed all liabilities.

b) Commitments - On March 29, 2002, we signed a lease agreement for the purchase
and installation of $552,000 of point-of-sale systems in 45 Company-owned
restaurants.

c) Equity Proceeds - Subsequent to March 25, 2002, additional options and
warrants were exercised into 826,851 shares of common stock for which the
Company received net proceeds of $1.05 million.

d) Stock-based Compensation - On April 8, 2002, the Board of Directors granted
652,250 stock options to certain employees of the Company in accordance with the
2001 stock option plan.

                                       9
<PAGE>

ITEM 2.      MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

Introduction

     Checkers Drive-In Restaurants, Inc. ("Checkers"), a Delaware corporation,
and its wholly-owned subsidiaries (collectively, the "Company") is in the
business of operating and franchising Checkers Restaurants and Rally's
restaurants. We are the single largest chain of double drive-thru restaurants in
the United States. Our Company is a combination of two similar quick-service
restaurant chains, Checkers and Rally's Hamburgers (Rally's), which were merged
in August 1999. Both companies were founded on a simple premise - serve the
highest quality food, made fresh-to-order, served quickly and at a fair price.

     The Company has developed and owns a comprehensive system for developing
and operating double drive-thru restaurants, which includes trademarks, building
designs and layouts, equipment, ingredients, recipes and specifications for
authorized food products, methods of inventory control and certain operational
and business standards.

     At March 25, 2002, there were 795 restaurant locations, consisting of 255
Company-owned restaurants and 540 franchisee-owned restaurants. Of the 795
locations, 386 are Rally's restaurants operating in 17 different states and 409
are Checkers restaurants operating in 21 different states, the District of
Columbia, Puerto Rico and the West Bank in the Middle East. Three of the owned
restaurants are owned by joint venture partnerships in which we have a 50%, 51%
and 75% ownership interest. Checkers was founded in 1986 and Rally's was founded
in 1985.

     We receive revenues from restaurant sales, franchise fees and royalties.
Restaurant food and paper costs, labor costs, occupancy expense, other operating
expenses, depreciation and amortization, and advertising and promotion expenses
relate directly to Company-owned restaurants. Other expenses, such as
depreciation and amortization, and general and administrative expenses, relate
to Company-owned restaurant operations and the Company's franchise sales and
support functions. Our revenues and expenses are affected by the number and
timing of additional restaurant openings, closings, market sales and the sales
volumes of both existing and new restaurants.

Special Note Regarding Forward-Looking Statements

     Certain statements in this Form 10-Q under "Part I, Item 2. Management's
Discussion and Analysis of Financial Condition and Results of Operations," "Part
II, Item 1. Legal Proceedings" and elsewhere in this Form 10-Q constitute
"forward-looking statements" which we believe are within the meaning of the
Securities Act of 1933, as amended and the Securities Exchange Act of 1934, as
amended. Also, when we use words such as "believes", "expects", "anticipates" or
similar expressions, we are making forward looking statements. Such
forward-looking statements involve known and unknown risks, uncertainties, and
other factors which may cause the actual results, performance, or achievements
of the Company to be materially different from any future results, performance,
or achievements expressed or implied by such forward-looking statements. Some of
the risks that should be considered include:

     (i)  The fact that we compete with numerous well established competitors
who have substantially greater financial resources and longer operating
histories than us, which enables them to engage in heavy and sustained
discounting as well as substantial advertising and promotion. While this
competition is already intense, if it increases, it could have an even greater
adverse impact on revenues and profitability of company and franchise
restaurants.

     (ii) The fact that we anticipate the need to continue the improvement in
same restaurant sales if we are to achieve improved profitability. Sales
increases will depend, among other things, on the success of our advertising and
promotion efforts and the success of other operating and training initiatives,
all of which are speculative.

     We may also be negatively impacted by other factors common to the
restaurant industry such as changes in consumer tastes away from red meat and
fried foods; consumer acceptance of new products; consumer frequency; increases
in the costs of food; paper, labor, health care, workers' compensation or
energy; an inadequate number of available hourly paid employees; and/or
decreases in the availability of affordable capital resources; development and
operating costs. Other factors which may negatively impact the Company include,
among others, adverse publicity; general economic and business conditions;
availability, locations, and terms of sites for restaurant development; changes
in business strategy or development plans; quality of management; availability,
terms and deployment of capital; the results of financing efforts; business
abilities and judgement of personnel; availability of qualified personnel;
changes in, or failure to comply with, government regulations; continued NASDAQ
listing; weather conditions; construction schedules, results of existing and
future litigation and other factors referenced in this Form 10-Q.

                                       10
<PAGE>
                      Restaurants Operating in the System
                            For the Quarters Ended

<TABLE>
<CAPTION>
                             June 19,   Sept. 11,    Jan. 1,    March 26,     June 18,    Sept. 10,    Dec. 31,    March 25,
                               2000        2000       2001        2001          2001        2001         2001         2002
                            ----------- ----------- ---------- ------------  ----------- ------------ ----------- -------------
<S>                         <C>         <C>         <C>        <C>           <C>         <C>          <C>         <C>
Company-operated:
   Beginning of quarter            367         287        224          195          207          207         236           235
   Openings/transfers in             -           1          -           29            -           29           1            23
   Closings/transfers out          (80)        (64)       (29)         (17)           -            -          (2)           (3)
                            ----------  ----------  ---------  -----------   ----------  -----------  ----------  ------------
   End of quarter                  287         224        195          207          207          236         235           255
                            ----------  ----------  ---------  -----------   ----------  -----------  ----------  ------------
Franchise:
   Beginning of quarter            537         601        649          659          638          640         606           586
   Openings/transfers in            81          65         42           17            5            1           5             -
   Closings/transfers out          (17)        (17)       (32)         (38)          (3)         (35)        (25)          (46)
                            ----------  ----------  ---------  -----------   ----------  -----------  ----------  ------------
   End of quarter                  601         649        659          638          640          606         586           540
                            ----------  ----------  ---------  -----------   ----------  -----------  ----------  ------------

                                   888         873        854          845          847          842         821           795
                            ==========  ==========  =========  ===========   ==========  ===========  ==========  ============
</TABLE>

                             RESULTS OF OPERATIONS
                             ---------------------

     The table below sets forth the percentage relationship to total revenues,
unless otherwise indicated, of certain items included in the Company's
consolidated statements of income and operating data for the periods indicated:

<TABLE>
<CAPTION>
                                                                              Quarter Ended
                                                                       ----------------------------
                                                                       March 25,       March 26,
                                                                          2002            2001
                                                                       ------------   -------------
<S>                                                                    <C>            <C>
REVENUES:
Restaurant sales                                                             91.8%           89.8%
Franchise royalty revenue                                                     8.2%            9.7%
Franchise fees and other income                                               0.0%            0.5%
                                                                       ----------     -----------
   Total revenues                                                           100.0%          100.0%

COSTS AND EXPENSES:
Restaurant food and paper costs (1)                                          30.3%           32.3%
Restaurant labor costs (1)                                                   31.8%           32.9%
Restaurant occupancy expenses (1)                                             7.0%            7.9%
Restaurant depreciation and amortization (1)                                  3.5%            3.1%
Other restaurant operating expenses (1)                                      12.6%           12.7%
General and administrative expenses                                           7.5%            8.0%
Advertising (1)                                                               5.7%            5.8%
Bad debt expense                                                              0.2%            0.5%
Non-cash compensation                                                         0.0%            0.0%
Other depreciation and amortization                                           0.4%            2.2%
Restaurant closure expense                                                    0.9%            0.0%
Gain on sale of assets                                                       (0.2%)          (1.0%)
                                                                       ----------     -----------
  Total costs & expenses                                                     92.3%           94.8%
                                                                       ----------     -----------
  Operating income                                                            7.7%            5.2%

OTHER INCOME (EXPENSE):
Interest income                                                               1.0%            1.2%
Interest expense                                                             (2.0%)          (3.9%)
                                                                       ----------     -----------
Income before minority interests and income tax expense                       6.7%            2.5%
Minority interests in operations of joint ventures                           (0.1%)          (0.0%)
                                                                       ----------     -----------
Income before income tax expense                                              6.6%            2.5%
Income tax expense                                                            0.0%            0.1%
                                                                       ----------     -----------
Net income                                                                    6.6%            2.4%
                                                                       ==========     ===========

</TABLE>
(1) As a percentage of restaurant sales

                                       11
<PAGE>

Comparison of Historical Results - Quarter Ended March 25, 2002 and Quarter
Ended March 26, 2001

     Revenues. Total revenues were $40.4 million for the quarter ended March 25,
     --------
2002, compared to $35.3 million for the quarter ended March 26, 2001.
Company-owned restaurant sales increased by $5.4 million for the quarter ended
March 25, 2002 to $37.1 million, as compared to $31.7 million for the quarter
ended March 26, 2001 due to the increased number of Company-owned stores.
California, Arizona, Macon and Philadelphia accounted for $5.5 million in
additional sales for the first quarter of 2002.

     Sales at comparable restaurants, which include only the units that were in
operation during the entire quarters being compared increased 0.2% for the
quarter ended March 25, 2002 as compared with the quarter ended March 26, 2001.

     Royalty income decreased by $116,000 as compared to the first quarter one
year ago due to the decreased number of franchise locations. There was an
average of 648 franchise locations during the first quarter of 2001 as compared
to 563 during the first quarter of 2002.

     Franchise fees decreased for the quarter ended March 25, 2002 as compared
to the quarter ended March 26, 2001 due to the recognition of income from CKE
Restaurants, Inc. of approximately $150,000 in the first quarter of 2001 prior
to repossessing the 21 stores on July 3, 2001.

     Costs and expenses. Restaurant food and paper costs totaled $11.2 million
     ------------------
or 30.3% of restaurant sales for the quarter ended March 25, 2002, compared to
$10.2 million or 32.3% of restaurant sales for the quarter ended March 26, 2001.
The decrease in food and paper costs as a percentage of restaurant sales is due
to beef costs beginning to soften during the fourth quarter of 2001 and into the
current quarter, while they were near their high point during the first quarter
of 2001. In addition, gross margin for the current promotion was more favorable
to the Company compared to the promotion that ran during the first quarter in
the prior year.

     Restaurant labor costs, which include restaurant employees' salaries,
wages, benefits and related taxes, totaled $11.8 million or 31.8% of restaurant
sales for the quarter ended March 25, 2002, compared to $10.4 million or 32.9%
of restaurant sales for the quarter ended March 26, 2001. The decrease in
restaurant labor costs as compared to last year was due to operations planning
put in place by management. During 2001, emphasis was put on staffing the stores
so service time would decrease and customer satisfaction would increase. Focus
was shifted to labor efficiencies toward the end of 2001.

     Restaurant occupancy expenses, which include rent, property taxes, licenses
and insurance, totaled $2.6 million or 7.0% of restaurant sales for the quarter
ended March 25, 2002 compared to $2.5 million or 7.9% of restaurant sales for
the quarter ended March 26, 2001. While restaurant occupancy expense remained
relatively constant, it decreased 0.9% as a percentage of restaurant sales. The
decrease is due to decreases in several of these expenses as compared to the
prior year. In addition, six of the operating restaurants, which were reacquired
subsequent to March 26, 2001, are located on land owned by the Company,
resulting in additional sales without corresponding rent expense, thereby
decreasing occupancy as a percentage of sales.

     Restaurant depreciation and amortization totaled $1.3 or 3.5% of restaurant
sales for the quarter ended March 25, 2002, compared to $1.0 million or 3.1% for
the quarter ended March 26, 2001. The increase is the result of management's
plan to continue to operate 45 Company-owned restaurants and their
classification for accounting purposes. Restaurants that were originally
forecasted to be sold as part of the 1999 restructuring plan were reclassified
from Held for Sale to Held for Use at December 31, 2001. As a result, we began
recognizing depreciation on these assets at the beginning of the quarter ended
March 25, 2002.

     Other restaurant operating expenses include all other restaurant level
operating expenses, and specifically include utilities, maintenance and other
costs. These expenses totaled $4.7 million, or 12.6% of restaurant sales for the
quarter ended March 25, 2002 compared to $4.0 million, or 12.7% of restaurant
sales for the quarter ended March 26, 2001. These costs, as a percentage of
sales, have remained consistent for the two quarters. The increase in dollars
spent is due to the increase in Company-owned restaurants.

     General and administrative expenses were $3.0 million, or 7.5% of total
revenues for the quarter ended March 25, 2002 compared to $2.8 million, or 8.0%
of total revenues for the quarter ended March 26, 2001. These costs have
decreased as a percentage of total revenues due to their relatively fixed nature
and increased revenues.

     Advertising expense was $2.1 million, or 5.7% of restaurant sales for the
quarter ended March 25, 2002 compared to $1.8 million, or 5.8% of restaurant
sales for the quarter ended March 26, 2001. The costs have remained relatively
consistent between the two quarters.

     Bad debt expense remained relatively consistent at $0.1 million, or 0.2% of
total revenues for the quarter ended March 25, 2002 compared to $0.2 million, or
0.5% of total revenues for the quarter ended March 26, 2001.

                                       12
<PAGE>

     Non-cash compensation resulted from certain options granted and modified in
fiscal 2000. Non-cash compensation recognized for the quarter ended March 25,
2002 and the quarter ended March 26, 2001 was $23,000 for those options granted
with a vesting period through 2003.

     Other depreciation and amortization decreased by $641,000 to $152,000. The
decrease is due to the application of FAS 142 for intangible assets. The
goodwill and tradename carried on the books of the company are no longer
amortized. Quarterly amortization for goodwill and the tradename amounted to
approximately $549,000 for the quarter ended March 26, 2001.

     Interest expense. Interest expense decreased to $814,000, or 2.0% of total
     ----------------
revenues for the quarter ended March 25, 2002 from $1.4 million, or 3.9% of
total revenues for the quarter ended March 26, 2001. The decrease in interest
expense is due primarily to the decrease in debt by approximately $5 million
since January 2, 2001. In addition, 30% interest rate debt was partially paid
off and refinanced with 14% debt in June 2001.

     Income tax expense. The Company recorded no income tax expense for the
     ------------------
quarter ended March 25, 2002. Available federal and state net operating losses
will reduce taxable income to zero based upon operations during the quarter
ended March 25, 2002. The income tax expense recorded during the quarter ended
March 26, 2001 was for estimated federal alternative minimum tax prior to the
Jobs Creation and Workers' Assistance Act of 2002.

Liquidity and Capital Resources

     The restaurant industry in general, operates with a working capital deficit
because most of our investments are in long-term restaurant operating assets. We
do not normally require large amounts of working capital to maintain operations
since sales are for cash, purchases are on open accounts and meat and produce
inventories are limited to a three-to-five day supply to assure freshness. We do
not have significant levels of accounts receivable or inventory, and receive
credit from our trade suppliers. Funds available from cash sales not needed
immediately to pay our trade suppliers are used for non-current capital
expenditures.

     We have positive working capital of $1.5 million at March 25, 2002 as
compared to a $2.5 million deficit at December 31, 2001. The change to liquidity
is primarily due to operating profits for the quarter of $2.7 million, and
additional capital contributions of $0.8 million from the exercise of options
and warrants into 261,583 shares of common stock.

     The Company is subject to certain restrictive financial and non-financial
covenants under certain of its debt agreements, including EBITDA and a Fixed
Charge Coverage ratio. We were in compliance with all of the covenants for the
quarter ended March 25, 2002.

     Cash and cash equivalents have increased approximately $4.5 million to
$11.6 million since the fiscal year ended December 31, 2001. Cash flow from
operating activities was $5.1 million compared to $1.4 million during the same
period last year. Current year cash flows are largely attributable to current
profits, a decrease in outstanding accounts receivable and prepaid expenses,
partially offset by a net decrease in the balances of accounts payable and
accrued liabilities.

     Cash flow used for investing activities was $0.2 million related primarily
to capital expenditures at existing restaurants and the acquisition of 23
restaurants from former franchisees. The capital expenditures related primarily
to restaurant level renovation.

     Cash used by financing activities was $0.5 million. We received $0.8
million from the issuance of common stock from the exercise of stock options and
warrants during the quarter ended March 25, 2002. The Company paid $1.0 million
for monthly principal payments on long-term debt and also purchased treasury
stock for $0.2 million.

                                       13
<PAGE>

ITEM 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest rate and foreign exchange rate fluctuations
----------------------------------------------------

          Our exposure to financial market risks is the impact that interest
rate changes and availability could have on our debt. Borrowings under our
primary debt facilities bear interest ranging from 5.6% to 16.3%. An increase in
short-term and long-term interest rates would result in a reduction of pre-tax
earnings. Substantially all of our business is transacted in U.S. dollars.
Accordingly, foreign exchange rate fluctuations have never had a significant
impact on the Company and are not expected to in the foreseeable future.

Commodity Price Risk
--------------------

     We purchase certain products which are affected by commodity prices and
are, therefore, subject to price volatility caused by weather, market conditions
and other factors which are not considered predictable or within the Company's
control. Although many of the products purchased are subject to changes in
commodity prices, certain purchasing contracts or pricing arrangements have been
negotiated in advance to minimize price volatility. Typically, the Company uses
these types of purchasing techniques to control costs as an alternative to
directly managing financial instruments to hedge commodity prices. In many
cases, the Company believes it will be able to address commodity cost increases,
which are significant and appear to be long-term in nature by adjusting its menu
pricing or changing our product delivery strategy. However, increases in
commodity prices could result in lower restaurant-level operating margins.

PART II.  OTHER INFORMATION

ITEM 1.   LEGAL PROCEEDINGS

     Jonathan Mittman et al. v. Rally's Hamburgers, Inc., et al. In January and
     ----------------------------------------------------------
February 1994, two putative class action lawsuits were filed, purportedly on
behalf of the stockholders of Rally's, in the United States District Court for
the Western District of Kentucky, Louisville division, against Rally's, Burt
Sugarman and Giant Group, Ltd. and certain of Rally's former officers and
directors and its auditors. The cases were subsequently consolidated under the
case name Jonathan Mittman et. al. vs. Rally's Hamburgers, Inc., et. al. The
complaints allege that the defendants violated the Securities Exchange Act of
1934, among other claims, by issuing inaccurate public statements about Rally's
in order to arbitrarily inflate the price of its common stock. The plaintiffs
seek compensatory and other damages, and costs and expenses associated with the
litigation. On April 15, 1994, Rally's filed a motion to dismiss and a motion to
strike. On April 5, 1995, the Court struck certain provisions of the complaint
but otherwise denied Rally's motion to dismiss. In addition, the Court denied
plaintiffs' motion for class certification; the plaintiffs renewed this motion,
and despite opposition by the defendants, the Court granted such motion for
class certification on April 16, 1996, certifying a class from July 20, 1992 to
September 29, 1993. Motions for Summary Judgment were filed by the parties in
September 2000, and rulings by the Court are pending. The defendants deny all
wrongdoing and intend to defend themselves vigorously in this matter. Management
is unable to predict the outcome of this matter at the present time or whether
or not certain available insurance coverages will apply; however, if the Company
is found to be liable, such a result may have a material adverse impact on the
Company's financial condition and results of operations.

     Greenfelder et al. v. White, Jr., et al. On August 10, 1995, a state court
     ---------------------------------------
complaint was filed in the Circuit Court of the Sixth Judicial Circuit in and
for Pinellas County, Florida, Civil Division, entitled Gail P. Greenfelder and
Powers Burgers, Inc. v. James F. White, Jr., Checkers Drive-In Restaurants,
Inc., Herbert G. Brown, James E. Mattei, Jared D. Brown, Robert G. Brown and
George W. Cook. A companion complaint was also filed in the same Court on May
21, 1997, entitled Gail P. Greenfelder, Powers Burgers of Avon Park, Inc., and
Power Burgers of Sebring, Inc. v. James F. White, Jr., Checkers Drive-In
Restaurants, Inc., Herbert G. Brown, James E. Mattei, Jared D. Brown, Robert G.
Brown and George W. Cook. The original complaint alleged, generally, that
certain officers of Checkers intentionally inflicted severe emotional distress
upon Ms. Greenfelder, who is the sole stockholder, president and director of
Powers Burgers, Inc., a Checkers franchisee. The present versions of the amended
complaints in the two actions assert a number of claims for relief, including
claims for breach of contract, fraudulent inducement to contract, post-contract
fraud and breaches of implied duties of "good faith and fair dealings" in
connection with various franchise agreements and an area development agreement,
battery, defamation, negligent retention of employees, and violation of
Florida's Franchise Act. The parties reached a tentative settlement on January
11, 2001. The settlement has not yet been consummated, and we intend to defend
vigorously unless formal settlement is completed with terms similar to those
reached in the tentative settlement on January 11, 2001.

     Checkers Drive-In Restaurants, Inc. v. Tampa Checkmate Food Services,
     ---------------------------------------------------------------------
Inc., et al. On August 10, 1995, a state court counterclaim and third party
-----------
complaint was filed in the Circuit Court of the Thirteenth Judicial Circuit in
and for Hillsborough County, Florida, Civil Division, entitled Tampa Checkmate
Food Services, Inc., Checkmate Food Services, Inc. and Robert H. Gagne v.
Checkers Drive-In Restaurants, Inc., Herbert G. Brown, James E. Mattei, James F.
White, Jr., Jared D. Brown, Robert G. Brown and George W. Cook.

                                       14
<PAGE>

     A Complaint was originally filed by the Company in July of 1995 against Mr.
Gagne ("Gagne") and Tampa Checkmate Food Services, Inc. ("Tampa Checkmate"), a
company controlled by Mr. Gagne, to collect on a promissory note in the original
principal amount of $1,007,295 (the "promissory note") and foreclose on a
mortgage securing the promissory note issued by Tampa Checkmate, enforce the
terms of a personal guaranty executed by Mr. Gagne, and obtain declaratory
relief regarding the rights of the respective parties under Tampa Checkmate's
franchise agreement with the Company. The counterclaim and third party
complaint, as amended, generally alleged that Mr. Gagne, Tampa Checkmate and
Checkmate Food Services, Inc. ("Checkmate") were induced into entering into
various franchise agreements with personal guarantees to the Company based upon
misrepresentations by the Company and the named individuals and alleged
violations of Florida's Franchise Act, Florida's Deceptive and Unfair Trade
Practices Act, and breaches of implied duties of "good faith and fair dealings"
in connection with a settlement agreement and franchise agreement between
various of the parties.

     The action was tried before a jury in August of 1999. The Company's action
against Tampa Checkmate to collect the promissory note was stayed by virtue of
Tampa Checkmate's bankruptcy filing (see discussion below). The Court entered a
directed verdict and an involuntary dismissal as to all claims alleged against
Jared D. Brown, Robert G. Brown, and George W. Cook and also entered a directed
verdict and an involuntary dismissal as to certain other claims asserted against
the Company and the remaining individual Counterclaim Defendants, Herbert G.
Brown ("H. Brown"), James E. Mattei ("Mattei"), James F. White, Jr. ("White").
The jury rendered a verdict in favor of the Company, H. Brown, Mattei, and White
as to all claims asserted by Checkmate and in favor of Mattei as to all claims
asserted by Tampa Checkmate and Gagne. In response to certain jury
interrogatories, however, the jury made the following determinations: (i) That
Gagne was fraudulently induced to execute a certain Unconditional Guaranty and
that the Company was therefore not entitled to enforce its terms; (ii) That
Tampa Checkmate was fraudulently induced to execute a certain franchise
agreement by the actions of the Company, H. Brown, and White, jointly and
severally, and that Tampa Checkmate was damaged as a result thereof in the
amount of $151, 331; (iii) That the Company, H. Brown, and J. White, jointly and
severally, violated (S) 817.416(2)(a)(1) of the Florida Franchise Act relating
to the franchise agreement and that Tampa Checkmate was damaged as a result
thereof in the amount of $151, 331 and that Gagne was damaged as a result
thereof in the amount of $151,331; and (iv) That the Company, H. Brown, and J.
White did not violate Florida's Deceptive and Unfair Trade Practices Act
relating to the Ehrlich Road franchise agreement.

     The foregoing jury determinations were adopted by the trial court and
judgments were entered accordingly. The judgments were appealed to the Second
District Court of Appeal and on November 14, 2001, the Appeals Court (i)
affirmed the $151,331 judgment, plus statutory interest from August of 1999,
entered in favor of Tampa Checkmate and against the Company and White for
fraudulent inducement, but reversed as to Brown and that portion of the judgment
awarding Tampa Checkmate statutory interest prior to the jury's verdict in
August of 1999; (ii) affirmed the $151,331 judgment, plus statutory interest
from August of 1999, entered in favor of Tampa Checkmate and against the Company
and White for violation of (S) 817.416(2)(a)(1) of the Florida Franchise Act,
but reversed as to Brown; and (iii) reversed, in toto, the judgment entered in
favor of Gagne. Reciprocal motions for attorney fees remain pending in the state
court.

     On February 4, 2002, the state trial court granted a motion filed by Tampa
Checkmate to enter summary judgment as to the Company's affirmative defenses of
setoff and recoupment, the legal significance of which is unclear, and
reciprocal motions for attorney fees remain pending in the state court. The
Company has appealed the before-described summary judgment to the Second
District Court of Appeal and that appeal remains pending. The two judgments, as
modified by the Second District Court of Appeal, have been satisfied by making
payment to Tampa Checkmate's Chapter 7 Bankruptcy Trustee, but the Company
believes the liability to Tampa Checkmate under the two judgments, and any
liability for the payment of attorney fees, is subject to the Company's right of
setoff arising from Tampa Checkmate's liability to the Company under the
promissory note described above.

     On or about July 15, 1997, Tampa Checkmate filed a Chapter 11 petition in
the United States Bankruptcy Court for the Middle District of Florida, Tampa
Division entitled In re: Tampa Checkmate Food Services, Inc., and numbered as
97-11616-8G-1 on the docket of said Court. As noted above, the bankruptcy filing
stayed the Company's claim against Tampa Checkmate to collect the promissory
note. The Company filed a motion in the Bankruptcy Court to establish its right
to set-off, or in the alternative, recoup, the full amount due the Company under
the promissory note against the judgments. On March 17, 2001 and May 23, 2001,
the Bankruptcy Court entered orders recognizing the Company's right to setoff
the amount owed by Tampa Checkmate under the promissory note against the
judgments and lifting the automatic stay to allow the Company to proceed "to
effect the setoff and/or recoupment permitted by this Court to include
proceeding in state court or other appropriate forum to determine the amounts
owed, if any, by the Debtor (Tampa Checkmate) to Checkers."

     The Company has filed a motion in the Bankruptcy Court to determine the
amounts owed under the promissory note. Tampa Checkmate has opposed the motion
by asserting that the February 4, 2002 order entered in the state court
proceedings referenced above was dispositive of the Company's claim of setoff.
The Bankruptcy Court denied the Company's motion and directed that the amounts
owed under the promissory note be determined in the state court proceedings.

                                       15
<PAGE>

     Dorothy Hawkins v. Checkers Drive-In Restaurants, Inc. and KPMG Peat
     --------------------------------------------------------------------
Marwick. On March 4, 1999, a state court complaint was filed in the Circuit
-------
Court in and for Pinellas County, Florida, Civil Division. The complaint alleges
that Mrs. Hawkins was induced into purchasing a restaurant site and entering
into a franchise agreement with Checkers based on misrepresentations and
omissions made by Checkers. The complaint asserts claims for breach of contract,
breach of the implied covenant of good faith and fair dealing, violation of
Florida's Deceptive Trade Practices Act, fraudulent concealment, fraudulent
inducement, and negligent representation. The Company denies the material
allegations of the complaint and intends to defend this lawsuit vigorously.

     We are also involved in various other claims and legal actions arising in
the ordinary course of business. In the opinion of management, the ultimate
disposition of these matters will not have a material adverse effect on our
consolidated financial position, results of operations or liquidity.

ITEM 2.   CHANGES IN SECURITIES AND USE OF PROCEEDS

          None.

ITEM 3.   DEFAULTS UPON SENIOR SECURITIES

          None.

ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

          None.

ITEM 5.   OTHER INFORMATION

          None.

ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K

(a)       Exhibits:

          None.

(b)       Reports on 8-K:

          The following reports on Form 8-K were filed during the quarter
          covered by this report:

          None.

SIGNATURE
---------

          Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.


                                    Checkers Drive-In Restaurants, Inc.
                                    -----------------------------------
                                                (Registrant)


Date: April 24, 2002                 By: /s/ David G. Koehler
                                         --------------------
                                         Treasurer and Chief Financial Officer

                                       16